Disney warns cable on restrictive Web TV

By IBT Staff Reporter On 04/02/09 AT 6:08 PM

Walt Disney Co Chief Executive Bob Iger warned the cable TV industry not to alienate consumers by restricting cable programing on the Web to paying TV subscribers because it could provoke a consumer backlash.

The consumer is king, not us the content provider and not you the distributor, he said on Thursday at an industry event, The Cable Show.

Cable executives are working on plans to extend popular cable programing to the Web to paying subscribers as a way to retain cable TV customers who might prefer to watch programs online at their convenience.

But Iger sounded skeptical about the early plans and urged caution in execution.

Preventing people from watching any shows online, unless they subscribe to some multichannel service, could be viewed as both anti-consumer and anti-technology, and would be something we would find difficult to embrace, he said.

One of the challenges facing cable operators and programmers alike is how to verify and authenticate customers who have already paid for individual programs.

Iger said solving the authentication problem will be key to extending the value of programing. Disney has been one of the early major programmers to make some of its programing and movies available on the Web with services such as Apple's iTunes.

Last week Disney announced a new relationship with YouTube, offering some elements of its programing from the ESPN and ABC cable networks. Such deals bypass existing ways of working with the cable TV industry.

Another test for the program makers will be how to replicate the successful dual revenue model of affiliate fees paid by cable operators and advertising revenue. With the online video advertising still at a nascent stage, it is unlikely to be able to match the money generated by TV advertising in the near future.

In a panel following Iger's speech, Michael Wilner, chief executive of cable operator Insight Communications said programmers who choose to give their content away over the Web would put at risk the economic incentive for creating such programs.

Iger agreed with cable industry concerns that in the absence of Web alternatives for consumers, piracy could develop.

It is in all of our best interests to sustain a compelling model that drives legitimate purchases of content. However, there's also more that we can do.